The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Tuesday, March 8, 2011
Bihar to enact legislation on MFCs on lines of AP
Patna, Mar 7 (PTI) Bihar government was mulling a proposal to enact a legislation on the pattern of Andhra Pradesh to regulate and have effective control over Micro Finance Companies in the state. Replying to a short-notice question of BJP member Tar Kishore Prasad in the state Assembly, Deputy Chief Minister S K Modi said the SP in Katihar district was probing the case where a Micro Finance Company had allegedly subjected several debtors to "inhuman torture" for realisation of a piece of land under Dandkhora block in the district. To a supplementary, he said there was no guideline set by the RBI to rein in the activities of such financial institutions and added that the Centre is planning to bring a bill for regulating these institutions. He said his government was also mulling a proposal to enact a law to effectively regulate and control Micro Financing Institutions on the pattern of Andhra Pradesh. Later, replying to a starred-question of Amrendra Pratap Singh (BJP), Modi said the state''s annual credit plan for the next financial year would stand at Rs 40,500 crore which was up by almost Rs 3000 crore from the target fixed for the current fiscal. The low credit ratio has been a contentious issue for long between successive state governments and bankers, he said adding, "We are consistently trying to further improve the CDR and holding regular meeting of state level bankers committee exhorting the need for achieving their respective targets." To another question, he said the state government had decided in principle not to park its funds in any of the private banks as they were not cooperating in the task of improving the CDR, he said.
Muslims should cease depending on government grants: Economists
Mumbai: Muslims should now cease depending on government grants. They will have to become self-dependent. Minorities and Muslims have been ignored in the Union Budget 2011. These views were expressed by economists here in Mumbai on 5th March at a program called to discuss Union Budget 2011-12 and its implications on Muslims. At the program organized by Pragmatic Wealth Management Pvt Ltd, Dr M Y Khan, former senior director of Reserve Bank of India, said there is no good news in the budget for alleviation of educational and economic backwardness of Muslims. The budget has just Rs 2500 crore for minorities – none knows how much of it will go to Muslims and how much of the fund will reach those really deserved it. In the present situation, Muslim investors and industrialists who have a feeling of social and milli obligation should come forward. Dr Khan, who is chairman of Pragmatic Wealth Management Pvt Ltd, said Muslims do not want roti and kapda from the government. The government should set up quality institutions which could give higher and professional education to Muslim youth, which could help them improve their lot financially. On the economic opportunities for Muslims, he said capital market is the better option -- here one can invest in mutual fund and gold fund. He described the budget disappointing. At the occasion, Imtiaz Merchant, Managing Director of the Sharia investment and consultancy company, informed the audience about the activities of the company particularly Islami Tijara magazine and the website www.islamitijara.com through which consultancy is provided for Shariah-compliant investment.
http://www.twocircles.net/node/242109Cooperative banks penalised for violating RBI norms
AHMEDABAD: The Reserve Bank of India has penalised three cooperative banks in Gujarat with non adherence to RBI norms out of which two have also been charged for not following the anti-money laundering (AML) guidelines. The apex bank has imposed a penalty of Rs 1 lakh each on-Sulaimani Co-operative Bank of Vadodara, Shri Lodra Nagarik Sahakari Bank of Gandhinagar and Junagadh Commercial Co-operative Bank for flouting banking rules. The RBI had issued show cause notices to the banks, in response to which they submitted a written reply. "After considering the facts of the case and the banks' reply in the matter, the apex bank came to conclusion that the violations were substantiated and it warranted imposition of penalty," a RBI official said. The Sulaimani Co-operative Bank, in Vadodara was imposed penalty for not adhering to operational instructions specifically issued to the bank by RBI, besides instructions on ceiling on inter-bank deposits, inspection compliance and non adherence to AML guidelines. The Junagadh Commercial Cooperative bank has been levied penalty for violation of Know Your Customer norms and flouting AML guidelines. While, Shri Lodra Nagarik Sahakari Bank, in Gandhinagar was slapped penalty for violation of apex banks guidelines on KYC norms and not filing Cash Transaction Report (CTR) with Financial Intelligence Unit-India (FIU-IND), New Delhi.
RBI sets up panel to examine regulation of NBFC sector
Mumbai, Mar 7 (PTI) The Reserve Bank today announced setting up of a working group to examine issues pertaining to regulation of the NBFCs (Non-banking Finance Companies) sector, including their governance and supervision. The Group to be headed by former Deputy Governor Usha Thorat, who is presently Director of Centre for Advanced Financial Research and Learning (CAFRAL), will focus on the definition and classification of NBFCs, addressing regulatory gaps and regulatory arbitrage. It has also been asked to focus on maintaining standards of governance in the sector and appropriate approach to NBFC supervision, the RBI said in a statement. "The NBFC sector in India has undergone a significant transformation in the past few years and has come to be recognised as a systemically important element of the financial system," it said. The recent global financial crisis also highlighted the regulatory imperatives concerning the non-banking financial sector and the risks arising from regulatory gaps, arbitrage and systemic inter-connectedness. "A need was, therefore, felt to reflect on the broad principles that underpin the regulatory architecture for NBFCs, keeping in view the economic role and heterogeneity of this sector and the recent international experience," the apex bank said. The scope of examination by the Group will, however, be within the current legislative framework, it added. Other members of the Group include Sanjay Labroo, Director, Central Board, Reserve Bank of India, Bharat Doshi, Executive Director, Mahindra & Mahindra and Pratip Kar, Director, Globsyn Business School. Uma Subramaniam, Chief General Manager-in-Charge, Department of Non-Banking Supervision will be the Member-Secretary.
RBI pushes banking to remote areas
PALWAL, HARYANA: In a bid to deepen banking operations to remote villages and among the poor people, who so far remained outside the purview of banking operations, the Reserve Bank of India has started a special drive. The central bank along with the main bank of the area is working to expand banking operations using wireless technologies and the system of banking correspondent. At present, around half of the population in the country don’t have bank accounts. As the exercise to include poor people in the banking system is not financially viable, a part of the cost will be borne by RBI. In order to take banking to the remote villages, banks while opening an account of a person, also issue him an ATM card. At the same time, it will appoint a credible person in the area as a banking correspondent (BC), who will act as an agent of the bank. BC will be given a hand-held device, which could be connected to the bank's network through wireless connection. A person, who has an account in a bank of that area, can operate his account through the hand-held device. After swiping the ATM card in the hand-held device, he will have to type in his password to get access to his account. "After accessing to his account, he can deposit money with the banking correspondent, which can immediately credit the same in his account and give him a receipt. At the same time, if he wants to withdraw money from his account, he can take it from the banking correspondent, after debiting the money from his account on line," said RBI Regional Director Sandip Ghose. Ghose said that bank will also deploy mobile ATMs, which will go to every village in the area once a week. The mobile ATMs will function like a mobile branch of the bank. RBI deputy governor Subir Gokarn said that by 2011 every village having a population of 2000 will at least be connected once a week through mobile branch. The cost of ATM card will be Rs 112. As the bank will initially lose money in this endeavor, RBI will chip in with a subsidy of Rs 50 for each ATM card issued. RBI had organized an outreach program with Oriental Bank of Commerce in Gudhrana village in Palwal district in Haryana. This was RBI's 10th outreach programme in the current fiscal. Gokarn said that expanding banking operations among the poor people would help containing the pilferages while distributing the government-sponsored schemes among them. The wages paid under the government schemes like National Rural Employment Guarantee Scheme will directly deposited in the beneficiaries' account. Similarly, the old age pensions and scholarships to students can directly be deposited in their accounts. These efforts will reduce the role of middlemen and so the chances of pilferages. Not only this, the expansion of banking operations will also help villagers in accessing the loans from banks at reasonable rates. At present, they have to depend on money lender to secure loans at the time of needs.
RBI's outreach camp in Ukhrul
Imphal, March 07 2011: Reserved Bank of India will organize a Financial Outreach Camp at Ukhrul on March 21 as part of its Platinum Jubilee celebration. The RBI had organized such camps at various villages across the North Eastern states in 2009 and 2010. The RBI said that they have started the second phase of the financial outreach camp after the authority received a good response from the people. The first phase was successfully concluded, they added. The purpose of the scheduled camp is to bring awareness regarding banking facilities and an attempt at making available such banking facilities to every adult citizen in the targeted area, with an ultimate aim for 100% financial inclusion all over the country.The camp will be inaugurated by D.K Mohanty, Executive Director, RBI. To impart information, stalls would be set up by RBI, office of banking ombudsman, SIDBI, DRDA, Agriculture and Horticulture Departments, KVIC, DIC and some of the reputed SHGs, farmers clubs and NGOs.
http://www.e-pao.net/GP.asp?src=18..080311.mar11Islamic banking taking roots in India: Kerala launches interest free bank
The Kerala government has taken revolutionary step launching the first ever interest-free Islamic banking institution in India. The Al-Baraka came into action once the Kerala High Court dismissed a couple of writ petitions which challenged the setting up of Islamic financial institution in a secular country like India. The Islamic Bank is promoted by Kerala State Industrial Development Corporation (KSIDC) which has 11 percent stake in Al-Baraka Financial Services. The financial institution which operates on Islamic principles was held back as former union minister Subramanyam swami filed PIL challenging the move. A division bench comprising Chief Justice J Chalameswar and Justice P R Ramachandra Menon dismissed the petitions claiming that the government proposed institution can follow the financial laws of the country as well as sharia rules. The first of its like institution originally planned as government undertaking failed to get Reserve Bank clearance as well as court rulings. An internal working group of RBI whose report is yet be public held that such a form of banking is not possible given present regulations. However the system had got a shot on the arm when Prime Minister Manmohan Singh asked the Reserve Bank of India to look into the prospects of introducing an interest-free banking system in the country. "There have been demands for experimenting with Islamic banking in the country," Singh said. And now the court cleared the way for setting up the financial system as a state supported private company. Al –Baraka is proposed to work as an interest free banking system in which a sharia board will account the power to decide on the mode of investments. The company will invest the money only in Shariah compliant projects such as development and infrastructure projects, according to the promoters. The government plans to use the Al-Baraka resources for major projects like Southwest rail corridor and Coimbatore-Kochi corridor. 14 promoters of Al-Baraka have already contributed 40.2 million Indian rupees to the interest free financial institution which aims to mobilize around 400 billion rupees in total. The 17 member board of the directors is chaired by P. Mohammed Ali, veteran GCC based business man, and C.K. Menon as vice chairman. The government initiative is widely appreciated by people of the state mainly by Muslims who account for close to 24 percent of the 32 million population. It has warmly welcomed by nonresident Keralites in which Muslims play 50% role in umbers as well as in the total remittance into the state. However, a few people believe that its’ a government agenda to tap the huge amount of money from expatriate Muslims who are keeping away from interest-smitten financial systems. Political opposition has been blaming the CPI (M) led left government for their minority appeasement move. But state government is firm on its stance projecting the example of Britain having an Islamic bank with seven branches where Muslims account for only 3% of population. They also claim that there are nearly 500 Islamic finance institutions worldwide, managing $1 trillion in assets. The promoters of Al-Baraka proposed that Indian banking regulations would be changed to accommodate Islamic banking services. It would benefit the largest minority of the country as well as those who wish for interest-free banking services.
Home ministry asks states to step up drive against fake currency
The Ministry of Home Affairs has asked states to step up drives against fake Indian currency notes (FICNs) as this poses a serious threat to national security. Seizures and recoveries of FICNs are a matter of serious concern and in certain cases has indicated linkage to terrorist elements. There were about 1,850 cases detected; total value of Rs 258,272,889 of FICNs seized; and 1,265 persons arrested during the year 2010. States have been asked to share a copy of the forensic report on the seized and recovered FICNs with the Intelligence Bureau (IB) and the Reserve Bank of India (RBI). Subsequently, state police would rope in RBI to analyse the forensic report and share its findings with the IB. Besides, the states have also been asked to set up a committee headed by the director general of police with GM/DGM of RBI, officers of intelligence branch of state police, CID of state police, as members. A Home ministry official, who did not want to be quoted, told Business Standard “States have been asked to designate a police station at each district police headquarters as the nodal police station wherein the offences relating to FICNs recovered by banks can be reported. The banks will also correspondingly designate a nodal officer in each of the districts in their respective banks. These officers will be vested with the responsibility of reporting the seizures of the FICNs.” The officer said that nodal officers need to report seizures involving five or more than five pieces in one single transactions as a separate FIR. Moreover, states have been asked to evolve an efficient system of registration of cases which is crucial to enable both proper investigation and to ensure a comprehensive database for a meaningful action to get to the sources of the proliferation of FICNs. The National Investigation Agency has been empowered under the National Investigation Act to probe and prosecute cases relating to offences under various provisions of the Indian Penal Code. The officer informed that the Centre has nominated the Central Bureau of Investigation as the Nodal Agency to monitor investigation of fake currency note cases. The RBI has also strengthened the mechanism for detection of counterfeit notes by the banks.
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